The domestic demand for textiles is likely to remain robust from end-user segments, supported by a strong rise in private consumption expenditure during the rest of FY19. Also, textile exports are likely to rise, with apparel exporters benefitting from the depreciation of the Indian rupee against the US dollar. The Indian rupee depreciated at a higher rate against the US dollar over April-August 2018 than the currencies of key apparel-exporting nations, said India Ratings and Research (Ind-Ra).
The rating agency has maintained a stable outlook for the cotton and synthetic textiles for the remaining FY19. It is expected that the overall credit profile of the sector will gradually improve, as expected by the agency in February 2018.
The sector profitability is likely to improve gradually, with players passing on increased raw material prices to end-users, given the healthy demand, a depreciating rupee and waning impact of the structural issues. However, the positive impact of improved demand and profitability will be partly countered by sticky working capital requirements, Ind-Ra said.